NOTES TO FINANCIAL STATEMENTS
2012 Gross settled:
Foreign currency forward contracts (80) – – (80)
2012 Gross settled:
Foreign currency forward contracts 83 – – 83
SP Corporation Limited ANNUAL REPORT 2013
73
NOTES TO FINANCIAL STATEMENTS
31 December 2013
26 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (CONT’D) (f) Liquidity Risk Management (cont’d)
Liquidity and interest risk analyses (cont’d)
Non-derivative financial liabilities
The following tables detail the effective interest rates and the remaining contractual maturity for non-derivative financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group and Company can be required to pay.
The table includes both interest and principal cash flows. The adjustment column represents possible future cash flows attributable to the instrument included in the maturity analysis which is not included in the carrying amount of the financial liability on the statement of financial position.
Effective interest
rate
On demand or within
1 year
Within 2 to 5 years
After
5 years Adjustment Total
% $’000 $’000 $’000 $’000 $’000
Group 2013
Non-interest bearing – 25,566 – – – 25,566
2012
Non-interest bearing – 27,827 – – – 27,827
Company 2013
Non-interest bearing – 1,068 – – – 1,068
Financial guarantee
contracts – 59,143 – – (58,877) 266
60,211 – – (58,877) 1,334
2012
Non-interest bearing – 1,535 – – – 1,535
Financial guarantee
contracts – 75,816 – – (75,462) 354
77,351 – – (75,462) 1,889
SP Corporation Limited ANNUAL REPORT 2013
74
NOTES TO
FINANCIAL STATEMENTS
31 December 2013
26 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (CONT’D) (f) Liquidity Risk Management (cont’d)
Liquidity and interest risk analyses (cont’d)
Non-derivative financial assets
The following tables detail the effective interest rates and the expected maturity for non-derivative financial assets. The inclusion of information on non-derivative financial assets is necessary in order to understand the Group’s liquidity risk management as the Group’s liquidity risk is managed on a net asset and liability basis. The tables have been drawn up based on the undiscounted maturities of the financial assets including interest that will be earned on those assets except where the Group and the Company anticipates that the cash flow will occur in a different period.
Effective interest
rate
On demand or within
1 year
Within 2 to 5 years
After
5 years Adjustment Total
% $’000 $’000 $’000 $’000 $’000
Group 2013
Non-interest bearing – 50,749 – – – 50,749
Variable interest rate
instruments 0.07 1,789 – – – 1,789
Fixed interest rate
instruments 0.57 to 4.67 16,674 – – (236) 16,438
69,212 – – (236) 68,976
2012
Non-interest bearing – 47,414 – – – 47,414
Variable interest rate
instruments 0.10 189 – – – 189
Fixed interest rate
instruments 0.29 to 5.04 20,157 – – (246) 19,911
67,760 – – (246) 67,514
Company 2013
Non-interest bearing – 3,004 – – – 3,004
Fixed interest rate
instruments 0.96 17,254 – – (4) 17,250
20,258 – – (4) 20,254
2012
Non-interest bearing – 1,926 – – – 1,926
Fixed interest rate
instruments 1.04 17,591 – – (9) 17,582
19,517 – – (9) 19,508
SP Corporation Limited ANNUAL REPORT 2013
75
NOTES TO FINANCIAL STATEMENTS
31 December 2013
26 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT (CONT’D) (g) Fair Value of Financial Assets and Financial Liabilities
As at the end of reporting period, the carrying amounts of cash and bank balances, trade and other receivables and payables approximate their respective fair values due to the relatively short-term maturity of these financial instruments.
The Group classifies fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:
(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
(b) inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices) (Level 2); and
(c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).
The fair value of the foreign currency forward contracts is measured based on Level 2. The valuation technique applied is discounted cash flow and key inputs are future cash flows which are estimated based on forward exchange rates (from observable forward exchange rates at the end of the reporting period) and contract forward rates, discounted at a rate that reflects the credit risk of various counterparties.
(h) Capital Risk Management Policies and Objectives
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to maintain an optimal capital structure so as to maximise shareholder value. The capital structure of the Group consists of equity attributable to owners of the Company, in the form of issued capital, translation account and accumulated losses as disclosed in the statement of changes in equity, and limited borrowing.
The Group monitors capital based on a debt-to-adjusted capital ratio. This ratio is calculated as net debt divided by adjusted capital. Net debt is calculated as total debt less cash and bank balances. Adjusted capital comprises all components of equity (i.e. share capital, translation account and accumulated losses) other than amounts recognised in equity relating to cash flow hedges, where applicable. The Group’s overall strategy remains unchanged from 2012.
Group
2013 2012
$’000 $’000
Total debt – –
Less: Cash and bank balances (24,736) (17,616)
Net cash and bank balances (24,736) (17,616)
Adjusted capital 44,498 41,379
As the Group has net cash balance at the end of 2013 and 2012, debt to adjusted capital is not calculated.
SP Corporation Limited ANNUAL REPORT 2013
76
NOTES TO
FINANCIAL STATEMENTS
31 December 2013
27. LIST OF SIGNIFICANT SUBSIDIARIES
Name of subsidiary and country of
incorporation/operation Principal activities
Interest and voting power held
by the Group
2013 2012
% %
SP Resources International Pte. Ltd.
(Singapore) (a)
Trading and marketing of industrial products
100 100
SP Global International Pte. Ltd.
(Singapore) (a)
Distribution of consumer products 100 100
Soil & Foundation (Pte) Limited (Singapore) (a)
Geotechnical instrumentation and investigation, laboratory testing, environmental services and micro-piling
100 100
PT. SP Mining & Engineering (Indonesia) (b)
Engineering contractor 100 100
Globaltraco International Pte Ltd (Singapore) (a)
Distribution of tyres 100 100
SP Performance Pte. Ltd.
(Singapore) (a) #
Retreading of tyres 100 100
Performance Retreads Sdn. Bhd.
(Malaysia) (b)
Retreading of tyres 100 100
(a) Audited by Deloitte & Touche LLP, Singapore.
(b) Audited by overseas practices of Deloitte Touche Tohmatsu Limited.
# Formerly known as Singapore Bandag (Private) Limited.
Compliance with Rule 1207(6) of the SGX Listing Manual
The Board of Directors and the Audit Committee, having reviewed the adequacy of the resources and experience of Deloitte & Touche LLP, the audit engagement partner assigned to the audit, their other audit engagements, the size and complexity of the Group, and the number and experience of supervisory and professional staff assigned to the audit, were satisfied that the Group had complied with rules 712 and 715 of the SGX Listing Manual.
SP Corporation Limited ANNUAL REPORT 2013